The average judgment creditor knows enough about the law to consider going after traditional assets for payment. Things like real estate and bank accounts are the first line of enforcement. Creditors know to consider bank garnishment as well. What most don’t know is that the law also gives them access to non-traditional assets.
Such assets could prove to be a game changer when going up against debtors who have limited the number of traditional assets they have. The question for creditors is twofold: what are those non-traditional assets and how do I go after them?
Different Categories of Assets
Judgment Collectors is a Salt Lake City collection agency specializing in money judgments. They assist clients in nearly a dozen states. They explain that the full scope of non-traditional assets is so broad that it would be impossible to list them all. So instead, they break non-traditional assets down into the following categories:
- Business interests (stock shares, rights to distributions, business ownership, etc.)
- Claims and settlements (pending insurance payments, settlements, pending lawsuits, etc.)
- Intellectual property (licenses, royalties, patents, copyrights, trademarks, etc.)
- Leasehold interests (legal rights to occupy commercial or residential property for profit)
- Negotiable instruments (certificates of deposit, promissory notes, bonds, etc.)
- Personal property (jewelry, collectibles, artwork, equipment, machinery, etc.)
- Receivables and debts (business invoice income, personal debts, etc.)
Even within the broad scope of all these categories, creditors should be aware that there still may be non-exempt assets in play. For example, some states do not allow creditors to go after a judgment debtor’s primary vehicle, especially if it’s a work vehicle. Other types of personal property would still be available.
Locating Non-Traditional Assets
The trick to leveraging non-traditional assets is finding them. Doing so is not always easy. Judgment Collectors experts say that creditors often have to employ advanced investigatory strategies and tools. In addition to searching public records, they may have to leverage sophisticated private databases. They may have to bring in private investigators to help them dig.
Supplementary Proceedings
It is sometimes necessary to turn to supplementary proceedings to access non-traditional assets. These are additional court proceedings designed to supervise how creditors glean information. In many cases, the proceedings involve bringing third parties into the case.
Discovery Tools
Locating non-traditional assets often relies on choosing the right discovery tools and using them strategically. Common tools include interrogatories, depositions, subpoenas, and document requests.
Issuing subpoenas against third parties can be especially helpful against debtors refusing to provide legally required information. A third party, like a bank or business partner, could reveal much information the debtor is trying to keep hidden.
Legal Enforcement Mechanisms
Regardless of how a creditor decides to locate non-traditional assets, he must remain cognizant of the legal mechanisms put in place. Another way to say it is that creditors and their representatives must always operate within the confines of the law. Judgment collection is not a free-for-all. Creditors are not allowed to do whatever they please.
Within the confines of those legal enforcement mechanisms, creditors should:
- Be creative and persistent in their asset discovery and collection strategies.
- Take advantage of legal counsel, especially when discovery is cross-jurisdictional.
- Continually monitor the debtor’s activity, looking for changes in his financial situation.
- Fully understand exemptions so that exempt assets are not targeted.
The long and short of it is that bank accounts and real estate are not the only avenues for enforcing a money judgment. There are plenty of non-traditional assets a creditor could go after. It’s a matter of knowing what those assets are and where to find them.